NBN Co: Wolf In Sheeps Clothing?

The Senate hearing committee currently ongoing has heard of the suspicion held by several parties involved about the eventual powers, if realised, the NBN Co could hold.

The proposed Companies Bill and the Access Bill, currently being discussed, which will decide its powers will put “the benefits of the NBN in jeopardy,” say Telstra, who fear competition will be wiped out if the laws see the light of day.

Telstra have called on the government to ensure the fledgling company is a wholesale provider only, which was its original purpose, it argues.

The telco has called on the government to prevent the NBN Co from entering the retail market, fearing the NBN Co will usurp their business interest by supplying major utilities like hospitals and other profitable clients including Woolworths, mining companies and state agencies – all lucrative business Telstra wants for itself.

“The present provisions are easily circumvented and would enable NBN Co to vertically integrate into retail corporate and government markets with little difficulty,” Telstra says in a statement.

Telstra’s rival Optus also recently came out with scathing criticism of the NBN, with its CEO Paul O Sullivan calling for the complete outsourcing of the company’s management.

He also said that the NBN could become another Telstra “monopoly”.

Just this week, the country’s fourth largest ISP, TPG has also called for the NBN to be simplified to avoid cherry picking lucrative CBD areas rather than focusing on residential customers.

“They should worry about consumers and households rather than businesses in CBD areas. They should make the rules simple, so you don’t have to go through all this complex change and costs,” TPG CEO David Teoh told The Australian.

However, it seems no one is certain of the potential nature of the NBN Co is and whether or not they could emerge as a significant player at the retail end.

The ACCC expressed its uncertainty at the hearing, supporting Telstra’s previous claim that the NBN held many of the characteristics of a natural monopoly.

Its head of communication policy, Michael Cosgrave, stated “I’d accept that there’s always issues at the margin around whether… the provision of services reflects the underlying policy intent of wholesale only,” according to an AAP report.

Cosgrave continued in his uncertain language, when questioned further on the matter, conceding “that’s one of a myriad of possibilities,” referring to the idea of the Co being able to move outside its wholesale remit.

The hearing was also told how the communication minister has the power to prevent the NBN from supplying a particular service.

Concerns were also raised about the possibility of future privatisation, although department officials say new arrangements would be put in place to deal with this.

However, Optus has made calls for management of the company to be put out to tender.

“The operations of the NBN itself should be put out to competitive tender sooner rather than later,” its CEO Paul O Sullivan told a Kickstart technology conference two weeks ago.

However, in the face of this avalanche of scrutiny from telcos and politicians alike, there is a danger the central objective of the NBN could get lost, believes NBN boss Mike Quigley, who said his company had received 100 times more questions on notice than other commercial entities.

However, he did admit he sees where industry colleagues were coming from, saying, “if you are a company relying on access to another company’s network, which is also a competitor, it is pretty tough.”

The broadband provider is due to be privatised within five years of the network completion.